Arizona’s G&T Cooperatives CEO Patrick Ledger and three other electric cooperative CEOs had the chance to take their concerns over the impacts of the proposed carbon rule to the very top in a recent face-to-face meeting in Washington, D.C., with EPA Administrator Gina McCarthy.

The meeting provided what is probably the only chance to talk in person with the head of the EPA about the negative impacts the agency’s proposal will have on co-ops before it issues a final rule, now expected in July.

Ledger and the other CEOs told McCarthy the reductions in carbon emissions the EPA is seeking can’t be met and will create stranded assets and have severe economic impacts on the communities and people who use its power unless the rule is modified.

Patrick Ledger
Patrick Ledger

“Stranded costs, stranded assets and stranded debt: That’s our most immediate and most significant concern,” Ledger said.

“We demonstrated that some of the assumptions they’ve made about the Clean Power Plan are inapplicable to co-ops,” Ledger said.

The CEOs stressed the long-term and disproportionate impacts the proposed rule will have on communities and rural members, many of whom live at or below the federal poverty level. In addition, the proposed rule makes flawed assumptions about the availability of other forms of generation, like pipeline natural gas, and transmission infrastructure.

 

Co-ops cannot “magically redispatch to [natural gas] plants on the other side of the state without transmission,” and the transmission infrastructure doesn’t exist to get power from those plants to co-op members, said Ledger.

 

McCarthy has signaled in several recent media interviews that the EPA may revise the proposed rule, but she and other top EPA officials aren’t saying in what way, although some reports have said there may be movement on what the final goal will be in terms of overall carbon emissions.

However, McCarthy has also said the so-called ‘interim rule’ (which in Arizona would shutter all coal plants by 2020 if the rule is not modified) will not be shelved – although she hasn’t said publicly whether it might be amended. McCarthy has called an interim goal “essential.”

 

AzGTs has submitted a Subcategorization Proposal with different standards for co-ops, not-for-profit and municipal utilities that Ledger said would have very little effect on the EPA’s final reduction goals, but which would allow for the remaining useful life of coal units and wouldn’t create huge amounts of new debt.

 

“We would be able to participate in the rule in an appropriate way with appropriate reductions – and without being forced into bankruptcy,” Ledger said.

The NRECA has said its priorities are to get the EPA to recognize the need to preserve the remaining useful life of existing power plants, and to eliminate the interim 2020 goals and push back the deadline for final compliance.

The other electric co-ops represented in the meeting were Sunflower Electric Power Corporation, Seminole Electric Cooperative, and North Arkansas Electric Cooperative.